Among the major news on Australian stocks, Santos Limited (AU:STO) shares soared 4.17% today following reports of possible takeover offers by Saudi Aramco and Abu Dhabi National Oil Company (ADNOC). According to Bloomberg, both entities have been independently assessing potential bids for Santos, expressing their interest in the company’s liquefied natural gas (LNG) assets.
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Based in Australia, Santos Limited is an oil and gas producer specializing in the exploration of LPG, LNG, CSG, methane, ethane, and other resources.
Santos Under the Takeover Limelight
In the last few years, Santos has become a target of unsuccessful takeover attempts due to its disappointing share price performance. Earlier in February, Santos’ merger with Australia-based energy company Woodside Energy Group (AU:WDS) collapsed after both companies failed to agree on the valuation.
The takeover interest from Middle East players reflects their strategy to expand international gas portfolios with global acquisitions. Moreover, some sources believe Santos could draw interest from other potential buyers.
Analyst Saul Kavonic from MST Marquee pointed out that Santos is under pressure from investors seeking transformation. He noted that the company lacks a clear strategy to leverage its valuable LNG assets in Papua New Guinea. However, he added that Santos’ less attractive assets and liabilities could deter potential buyers.
Other analysts have highlighted the regulatory hurdles in Australia that could impact a potential takeover.
Is Santos a Buy, Hold, or Sell?
This week, UBS and Macquarie reiterated their Buy ratings on Santos stock, predicting 12.5% upside potential.
According to TipRanks’ consensus, STO stock has received a Moderate Buy rating, backed by seven Buy and three Hold recommendations. The Santos share price forecast is AU$8.39, which is 5% above the current trading levels.
